Franchising is the preferred vehicle for many to join the business world. It has become more important than ever, as the country is undergoing an economic downturn and jobs are being curtailed. Even corporate people are turning towards owning their own business to get away from jobs in which they are unhappy. The main question that bothers them is, “should we start a franchise or open a stand-alone business?” Most often the former is chosen and there are many reasons for that. Below are seven reasons why franchising is a better option when opening a business.

1.Experience of the person starting a business matters, if he is going for a stand-alone business. His lack of experience of running a business may hamper his judgment regarding core issues. That is one of the reasons why there are so many failed stand-alone businesses. On the other hand, with same experience, a franchisee will do well, because he has the support of his franchisor. The franchisor is an industry veteran; its vast experience and lessons learned from the past mistakes help the franchisee to avoid them. That is why franchising is more successful than stand-alone business.

2. An independent entrepreneur will find lenders unwilling to back his business idea, even if it’s viable. His lack of experience and sometimes, poorly written business plan, throws a spanner in his effort to get funds for his business. But a franchisee has his franchisor to help him in getting the required funds. What’s more, many of the concepts are small business franchise, making the SBA loan process smoother. The brand-name of some franchises opens door of even conservative lending institutes!

3.An independent business owner has to develop everything by himself. All aspects of the business, from recruiting to pricing, have to be determined by him. But a franchisee gets all these taught to him while starting a franchise.

4.The business model of an independent business takes years to develop. And during these years, the business owner is required to struggle to keep the business alive. But with franchising, the franchisee gets a ready-made business model to follow the moment he signs the franchise agreement with his franchisor.

5. Financial planning for a business is very vital. Independent business owners often find themselves short of money, because they didn’t foresee expenditures. But franchisors who offer franchise business for sale give their franchisees detailed financial planning, outlining the expenditure in each department.

6. Independent business owners get little or no discounts from suppliers and manufacturers. Hence, they have to either sell the product/service at a very low margin or have few customers because of high price! But a franchise concept gets special facilities from suppliers and manufacturers because of the sheer size of the order! So, the franchisees who buy a franchise from them have higher profit margin from the same product/service.

7. Lastly, when an independent business owner has a problem, he has to deal with it himself. But a franchisee can turn to the support system of the franchisor to find an answer to all his business-related problems.

Written on May 20th, 2008 by Joseph in Franchise Industry.
Source: brandEXPANSION Hot Press